Only two percent of manged service providers in North America have advanced their businesses enough to offer true fixed-fee services. That estimate, from N-able VP of Sales Mike Cullen, caught my attention earlier today.
I find Cullen’s estimate fantastic and depressing. Here’s why.
The 2 Percent Upside:
- The low figure suggests that we’re still very early in the managed services market
- Fewer than 1,500 MSPs have really mastered this market, leaving lots of fertile ground for the ongoing managed services land grab
- The tipping point, folks, is still ahead of us. As one very successful MSP told me, his entire business plan is to march toward 100,000 managed devices under fixed fee contracts.
The 2 Percent Downside:
- Managed services aren’t new, folks. So I get concerned when I hear so few VARs have successfully moved to fixed-fee services
- Many small businesses will never — I repeat: never — move to manged services because they don’t see value in their network infrastructure, and therefore aren’t willing to spend a predictable monthly fee to maintain it.
The 2 Percent Opportunity: So, how do MSPs convince more customers to shift to fixed-fee services? Cullen, several N-able representatives and a few MSPs gave me multiple answers. Now, I’d like to synthesize their thoughts down to a single answer:
- Don’t focus on the infrastructure. Do focus on the data. Even the cheapest small business owner understands his business can’t survive without its data. So focus on technologies like storage as a service (running on your own virtualized servers or a partner’s servers) to get customers used to writing you a monthly check.
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Posted In: MSP Mentor | North America
Tags: Managed Service Provider | Managed Services | MSP | N-able | North America
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Storage? Thats great, but what are you suggesting? Offsite backup services? Or remote storage? The latter obviously will require 1 fat pipe.
Hope i didnt miss the boat here, but can you be more specific on “storage” services that can be offered by MSPs?
The MSP Monstor: Keep a close eye on on-premise solutions melding with remote storage, such as Symantec Backup Exec and Symantec Protection Network. Also, watch for solutions in MSP data centers to meld with cloud services, such as Vembu StoreGrid working more closely with Amazon Simple Storage Services (S3).
I am NOT endorsing any of those products or services. Rather, I’m using them to show specific examples of the on-premise/off-site storage trend.
Thank you Joe, I will check these out. One thing I have always wondered:
Is it possible to use proven non SaaS products and their integrated reporting tools to provide top quality services to customers without the overhead of a subscription based monitoring solution?
I find my team, using traditional tools (NAV Corp Reporting, WSUS, GPO push, to perform most of their operations.
What do you think?
MSP Monstor: It’s difficult for me to say, since I don’t use the tools on a day-to-day basis. But perhaps our readers will weigh in…
Simple answer is, no. Efficiency is the key to profitibility in managed services, and you cannot efficiently manage your devices if you’re relying on disparate systems to manage and collect data on those devices. Your monitoring solutions will give you a central location to manage all devices. Your best in class monitoring tools have already begun to develop integration with best in class software and devices and we’ll continue to see more and more integration amonth our vendors and manufactureres. The more integration, the better and easier it will be for MSPs to manage their systems.
Amy Luby
MSP Services Network
http://www.mspsn.com
I certainly agree with Amy. An efficient shop is a profitable shop. If an MSP wants to remain profitable, he/she needs to make a concerted effort to standardize across one software platform. This creates a leaner/meaner MSP, or one who can do more for his client with less overhead. And it all starts with monitoring software, IMHO.
Tim Beard
Networthy Systems
Tim: Only one additional thought - make sure you choose a vendor that supports open standards and publishes their APIs. As new products come to market (from a range of vendors), you may want to plug them into your existing MSP platform. That requires an open architecture.
I’d like to disagree with someone on this post because it’s pretty boring to preach to the choir, but I really can’t. I tried to make this point in Dallas, so I’ll choose this forum to reiterate the fact that the biggest challenge we think MSPs will have in the ‘cloud’ era of computing is trying to maintain SLA consistency. Further to Tim’s point, this can’t happen if MSP’s don’t choose computing partners that can integrate their monitoring package (regardless of what is used) as a component part of their complete offering….
I’m not sure about all MSP’s, but the slice of MSP’s who interact on MSPMentor seem to be have a good grasp of their businesses and how they operate, now and in the future. One cahllenge I have is using a single vendor. So far, no single vendor does it all well. They may have a “way” to do something, but it is usually half baked, or a compromise I’m not willing to make in an important area, like WAN monitoring and alerting for instance. We are looking at a new managment tool that appears to do pretty good across the board, but we’ll see how it shakes out in testing and how well integrated it is with our PSA tool, ConnectWise. Does anyone have a good, nuetral comparison of the functionality of the tool providers such as zenith, kaseya, n-able, level platforms, etc…
Todd: We don’t do product reviews on MSPmentor but you can find an older article on CRN here. Please draw your own conclusions and note that the market has evolved significantly since the review was published in 2007.
Thanks Joe, I was hoping one of the readers might have come across resources that provide valuable info on test drives of real tools that real msp’s use. I’m wondering if anyone in your readership has ever seen a review of MSP tools or tech that was an accurate example of what you actually experienced using the product day to day? Would anyone see value in something like that? I know that I’ve spent 10’s of thousands of dollars just on researching various tools to meet our needs over the past 8 years.
Todd: I do think many readers are looking for reliable, real-word comparisons of the tools. But I would also caution all MSPs:
Choosing a tool is a bit like buying a high-quality car. You can read product reviews of cars. But you really need to test drive the cars that interest you before making a buying decision.
It’s a similar scenario in the MSP tools market. Years ago, it may have cost you thousands of dollars to research the tools. But these days, most of the tool developers offer free “try before you buy” offers, and/or low-end starter programs that allow you to gradually move deeper and deeper into the market.
Reviews are nice. But hands-on testing — which is essentially free from most MSP software providers now — is a critical step.
That question has been asked in so many different forums. What “fill in the blank” software should I use? You will get as many different answers as you will software providers. Because everybody wants something a little different. You have to make your own judgement after weighing all the options available to you. Client size, cash flow, pricing, etc. All the software on the market does something, it just depends if it is the same “something” your business happens to need. Joe is correct in that your choice should have published API’s for future integration, but virtually all of them do now. At least all the major players do.
Tim B/Networthy Systems
You do a great job of objectively talking about the upside and downside to these projections. I hope things end up being more of the “upside” persuasion, but it is just too early to tell.
Data Technician: Thanks for the feedback. Ironically, we do have some biases and we do tend to offer our opinions. But we will always welcome differing opinions on MSPmentor so that readers can learn from a range of views.